Many are still under-saving for retirement

October 2019 marked the seventh anniversary of the start of workplace pension auto-enrolment, perhaps proving that some grand government schemes can be a success.


There was much scepticism when the first phase of automatic enrolment into workplace pensions began in October 2012 – an earlier attempt to encourage workplace provision through the launch of stakeholder pensions had been a failure. After the initial phase focused on the largest employers, there was doubt around how small and micro-employers would handle the administrative burden.



As it turned out auto-enrolment has hugely increased the number of people in workplace pensions. Back in 2012, before the start of the initiative, only about four out of ten eligible private-sector employees were members of workplace pension arrangements.

By April 2018, nearly nine out of ten eligible employees were workplace pension members (85% in the private sector, 93% in the public sector), according to recently issued figures from the Department for Work and Pensions (DWP). A sharp rise in the minimum level of overall contributions from April 2018 does not appear to have dented employee enthusiasm. Another minimum contribution increase took effect from this April, seemingly with similar acceptance, although there are no firm figures yet.



Pension contributions for employees are still too low however and need to be increased, as the government acknowledged in a review issued in late 2017. The review suggested that around 12 million people were “under-saving for their retirement”, with most of those under savers earning more than £25,000 a year.

Higher earners are more likely to be not contributing enough because there is no longer any earnings-related element to the state pension. The new flat rate state pension introduced in April 2016 (£168.60 a week in 2019/20) represents a smaller proportion of earnings at retirement for those on higher pay.

However, auto-enrolment has left one sector of the working population untouched – the self-employed. Their numbers have been growing rapidly – think gig economy – to the point where they account for about 15% of the UK labour force in 2017. Yet pension participation among the self-employed has fallen. According to the DWP, “the self-employed group has seen a continuous decline in [pension] participation from 27% in 2008/09 to 15% in 2017/18”.



The government will probably find some mechanism to raise minimum contributions again, although this may not happen until the middle of the next decade. Meanwhile:

  • If you are an employer, remember that every three years, or earlier if they meet certain criteria, you must re-enrol any employees who have left your pension scheme.
  • If you are an employee, talk to us about whether you need to pre-empt that contribution increase to meet your retirement goals.
  • If you are self-employed, make sure that you are not among the 85% who do not contribute into a pension.

Please get in touch if you would like to discuss your circumstances with one of our team of advisers.


The value of your investments and the income from them can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance.

Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.